For companies required to produce interim financial statements (IFI):
Correct answer: D. the same firm should review the IFI and the financial statements for the year as a whole.
- A. one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.
- B. one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.
- C. the same firm should audit the IFI and the financial statements for the year as a whole.
- D. the same firm should review the IFI and the financial statements for the year as a whole.
Explanation
The interim financial statements are normally reviewed by the same firm that audits the annual financial statements, because that auditor already understands the entity and its controls. Option d uses imprecise wording by saying the annual statements are reviewed, but it expresses the intended same-firm principle.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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